Capital Appreciation Fund

DEFINITION of 'Capital Appreciation Fund'

A mutual fund that attempts to increase asset value primarily through investments in growth stocks. The heavy investment in growth stocks increases the risk associated with these types of funds.

Also called "aggressive growth fund".

BREAKING DOWN 'Capital Appreciation Fund'

As its name suggests, a capital appreciation fund seeks to deliver value to shareholders by investing in companies with appreciating share prices.

This type of fund is the exact opposite of an income or dividend fund, which focuses on investing in companies that pay shareholders a dividend. In addition to risk tolerance, something else to consider when analyzing these different types of funds is the fact that capital gains are usually taxed lower than interest income.

RELATED TERMS
  1. Value Fund

    A stock mutual fund that primarily holds stocks that are deemed ...
  2. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  3. Aggressive Growth Fund

    A mutual fund that attempts to achieve the highest capital gains. ...
  4. Growth And Income Fund

    A mutual fund or ETF that has a dual strategy of capital appreciation ...
  5. Capital Appreciation

    A rise in the value of an asset based on a rise in market price. ...
  6. Mutual Fund Yield

    Dividend payments divided by the value of a mutual fund’s shares. ...
Related Articles
  1. Investing

    Advising FAs: Explaining Mutual Funds to a Client

    More than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
  2. Professionals

    How Mutual Fund Managers Pick Stocks

    Learn about how mutual fund managers choose stocks based on the type of funds they manage and the investment goals of the funds' shareholders.
  3. Mutual Funds & ETFs

    The 4 Best American Funds for Growth Investors in 2016

    Discover four excellent growth funds from American Funds, one of the country's premier mutual fund families with a history of consistent returns.
  4. Retirement

    Should Balanced Funds Be Part Of Your Portfolio?

    Find out why you should include balanced funds in your portfolio, including the importance of customizability, diversification and professional management.
  5. Mutual Funds

    What mutual funds are: Professionally managed pools of stocks, bonds and/or other instruments that are divided into shares and sold to investors. Pros: Diversification; liquidity; simplicity; ...
  6. Mutual Funds & ETFs

    Top 5 American Funds for Retirement Diversification in 2016

    Discover five mutual funds from industry leader American Funds with high yields that are perfect for retirement savings diversification.
  7. Mutual Funds & ETFs

    The Top 5 Large Cap Growth Mutual Funds for 2016

    Understand how growth investing through mutual funds presents an opportunity for investors, and learn the best growth mutual funds for 2016.
  8. Retirement

    Top 5 Oppenheimer Funds for Retirement Diversification in 2016

    Discover the top five Oppenheimer Funds for diversifying your retirement savings. Learn how to balance your portfolio for maximum safety and return.
  9. Mutual Funds & ETFs

    The 5 Best American Funds

    Discover five of the best-performing mutual funds offered by American Funds, based on the funds' five-year average annualized returns.
  10. Mutual Funds & ETFs

    Trading Mutual Funds for a Living: Is It Possible?

    Find out why trading mutual funds for a living isn't your best bet, including how funds discourage short-term trading and which options may better serve you.
RELATED FAQS
  1. Do mutual funds pay dividends or interest?

    Learn how and why mutual funds pay interest or dividends, including the different funds and which types generate each type ... Read Answer >>
  2. Can mutual funds only hold stocks?

    Learn about which types of mutual funds consist of only stocks, which may include stocks in addition to other assets and ... Read Answer >>
  3. Do mutual funds pay interest?

    Find out how and why some mutual funds pay interest, and which types of funds make regular dividend distributions to shareholders ... Read Answer >>
  4. How often do mutual funds pay capital gains?

    Find out how often mutual funds distribute capital gains income, including the basics of how mutual funds work and why frequent ... Read Answer >>
  5. How do I calculate the loan-to-value ratio using Excel?

    Learn what a mutual fund and a money market fund are, and understand the differences between each and how they serve various ... Read Answer >>
  6. How do I judge a mutual fund's performance?

    Evaluate mutual fund performance utilizing resources such as Morningstar; compare the fund with others in its peer group ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center